The following is from a long article prepared earlier this month, for publication in a couple of weeks time. From rumours the Tribunal is today telling the government to tai ho my speculation was on the button.

The NZ Maori Council claims that the sale of shares in the electricity SOEs will make it harder for the government to respect Maori property rights in rivers. Allegedly, private shareholders could make it harder to reverse the state hydro dam builders’ expropriation of control rights, or make it harder to impose compensating water use charges.

The NZMC has not tried to hide the opportunism in this claim. This is a polite legal hold-up. The Crown has talked about defining Maori rights in rivers for decades, but meanwhile acts as if it owns them. The claim to rights of some kind in some parts of some rivers is strong but the argument is very thin that the sales will affect any of those rights.

Tribunal thinking is well signalled in previous reports on rivers. It is almost certain to hold that some Maori rights in some rivers have been breached. Astonishingly the Crown has effectively conceded that without making many of the limiting arguments. It is so hard to work out what the Crown thinks the Maori rights should mean that the government looks as if it set out to lose on those points.

On the merits of a properly argued case applying the law bargained for in the Treaty, most customary interests will have expired decades ago. But judging from the capitulation in the Marine and Coastal Area (Takutai Moana) Act 2011 (the current government’s replacement for Sir Michael Cullen’s Seabed and Foreshore Act) those arguments will never be put.

The NZ Maori Council does not necessarily need a solid legal platform. A severely limited decision can be translated by political rhetoric into a sincere grassroots Maori conviction of a conclusive finding in their favour. Appeasement does the rest. Ngati Apa[1] was a Court of Appeal decision that some iwi retained rights to an arguable case (to be heard by another court) for rights akin to ownership of some limited areas of seabed and foreshore where they had continuing practical use and control. That preliminary decision has now been converted to extensive rights to shared control and economic exploitation, without the underlying case ever having been completed. Pakeha leaders found it impossible to call out Maori leaders for failing to correct misleading descriptions of the limited scope and the flimsiness of the claims.

The Crown has put all its bets on persuading the country, including Maori, that Maori interests are not affected by the share sales. It should succeed, but probably won’t but even if it did, it would not quell the storm. Tribunal comments on the underlying rights may uncork pressure that will not relent.

Silver lining

If the Waitangi Tribunal agrees with the NZMC, and the pressure to appease drives the government to negotiate, there may yet be a silver lining for all New Zealanders.

An urgent negotiation between the NZMC and the Crown could crash through the barriers to creation of a simple property rights regime for water management. The overall social gains from creation of genuine property rights could provide enough surplus to buy-off the NZMC (or iwi) and leave us all better off, without a budget impact. Given political aversion to the “o” word (ownership) the rights may need a new label, but ownership is a broad church. Reasonable permanence of exclusivity of benefit plus transferability will do.

A panicky political deal could do the opposite, and cement New Zealand into a high cost, low benefit, constantly renegotiated water allocation regime[2]. It could foster continual ‘rent review’ disputes and attract a stream of new rent seekers. That would recreate many of the defects in property rights from which the Treaty and British law in 1840 promised an escape[3].

This note accordingly discusses features that would distinguish a valuable long term regime from a problematic one. People whose futures depend on clear water rights should get ready to help the government hold to important bottom lines. All over the world the water commons is being “enclosed” as water becomes recognised as a scarce and valuable resource. There is plenty of experience to draw on. New Zealand may have set out to invent something unique to avoid stirring up Maori claims to ownership, but that cat is out of the bag, so we can now go to proven models.

The Land and Water Forum work

Many attributes of good water management regimes have been explored by the Land and Water Forum. It has exhaustively established agreement that water scarcity requires rationing and water quality requires standards, that each catchment needs its own plan, and that it is desirable to have a broad consensus among the stakeholders of each catchment in support of the plan. But the Forum has so far avoided (publicly at least) the big issue – how do individual people and businesses and communities get and hold and lose or transfer the benefits, costs and rents from rights to use water. How do we ensure transaction costs do not blow out. Essentially, the Forum has yet to say how its system will not bog down under opportunities to do just what the NZMC is doing now, use legal tactics and cunning politics to take existing or future rights from others. The fine print operational details of property rights systems are everything. So far Forum reports have hardly touched on them.

Forum reports show exaggerated respect for abstract Maori principles but a search for simple words such as ‘property’ or ‘ownership’ or even ‘rights’ suggests the Forum must have been under a John Cleese protocol “don’t mention the [water ownership] war”.

This is not necessarily a criticism of the Forum. It is common sense to work first on things that can be agreed, to develop habits of cooperation and good faith discussion before tackling the really knotty issues. Even if ownership has been the taniwha-in-the-room up to now, the next report will explore transferability[4]. That must deal with many if not all of the elements that together constitute and define property rights.

After the Taniwha has woken

Thankfully the NZMC are rational. Hold-up tactics gained for Maori 20% of the quota on the creation of New Zealand’s world leading fisheries management system. They worked again in relation to broadcasting spectrum, and more recently when aquaculture territory was expanded. The NZMC has made it plain that redress for offence to Maori rights can be tangible. They will withdraw their action for a suitable price, perhaps a percentage of the SOEs. Given that Maori have been long encouraged to frame their wishes in semi-mystical and rarified terms such flexibility attracts criticism as venality, but we should all be relieved at pragmatism. Reaching a rational water rights regime could be vastly less likely without it.

Maori pragmatism is also historically respectable. The Treaty signatories had more pressing and practical goals than a spurious ‘partnership’. Kaitiakitanga, or co-management may flatter a Maori elite but the smoke-and-mirrors of governance is not the substance of the ownership they were promised.

The Crown has shown repeatedly that it would rather do a deal than subject our politics to the drawn out uncertainty of court determination. Elected politicians fear judicial political naivete, and Dickensian delay. But most importantly courts may only address facets of a dispute[5]. A political/legislative deal can be comprehensive (though loopholes have always been found in full and final settlements)”.

Is anyone in power prepared?

The big question is whether there is anyone on the side of the government (and ordinary New Zealanders) who is equipped to ensure that the next steps are towards proper property rights, and not the insulting and dangerous incitements to endless dispute of the kind created by the Marine and Coastal Area Act 2011. There is little evidence from recent years that anyone in government has dared talk about real property rights for Maori and Pakeha.

[2] The Land and Water Forum advocates ‘agility’ in water regulation, and ’collaborative’ management. It is not clear that it has appreciated the extent to which uncertainty and delay are the unavoidable corollary of opportunities to renegotiate and to dicker for political advantage.

[3] Article 2 of the Treaty offered “all the ordinary people of New Zealand” the then world leading legal ‘software’ of British property rights. Ownership did not depend on continual defence against intruders. You were relieved from pay-offs and currying favour with your neighbours, your rulers, or leading priests, to change the use of a property.

The UK was uniquely placed to offer Maori a model for transition from the now universally recognised problems of collective ownership. A ‘tragedy of the commons’ loomed with immigration’s population pressure. English lawyers had quarried property rights from custom and from Roman law. The rights were refined with experience, and the occasional revolution (like Henry VIII’s confiscation of church lands). The Crown’s exclusive right in Article 2, to buy property from Maori, was intended to protect ordinary Maori from the kind of dispossession suffered by Scots as their lairds converted the highland commons to sheep rearing.

[4] Report no 3 is scheduled to cover “How to manage within limits by developing more effective methods and strategies for allocating water, including trading and/or transfer systems”.

[5] The Supreme Court decision of 27 June 2012 in Paki and others v Crown held that Pouakani have enough case to be heard on whether they own part of the bed of the Waikato. The comprehensive statement of claim was filed in September 2005. Harrison J delivered the High Court judgment on 30 July 2008, after 5 days of hearing. After 3 days before the Court of Appeal that Court gave judgment on 11 December 2009. The Supreme Court heard two days of appeal argument in March 2011. They delivered their procedural judgment 15 months later, dealing in principle with only 1 of 7 contentious issues decided by the High Court.